Verified Payment System for Hourly and Fixed-Price Contracts
Step-by-Step Guide to Leveraging Upwork's Verified Payment System for Hourly and Fixed-Price Contracts
Upwork’s verified payment system is designed to streamline financial transactions between freelancers and clients. By using this system, both parties can ensure that payments are secure, transparent, and timely. Whether you’re working on an hourly contract or a fixed-price contract, understanding how to leverage this system will not only provide peace of mind but also contribute to maintaining professionalism and building trust with clients.
Below is a detailed guide, step by step, on how to use Upwork’s verified payment system effectively, focusing on both hourly and fixed-price contracts.
Step 1: Understanding the Payment System on Upwork
1.1. What is Upwork’s Verified Payment System?
Upwork’s verified payment system ensures that clients have the necessary funds in their accounts to pay for services rendered and that freelancers receive payments securely. It provides a safe escrow service for fixed-price projects and automatic time tracking for hourly contracts. Here’s how it works for both contract types:
Hourly Contracts: The verified payment system ensures that clients’ funds are available for hourly work, and the freelancer is paid for the time worked, as recorded in Upwork’s Work Diary. Upwork tracks time, and payments are processed weekly.
Fixed-Price Contracts: Upwork holds funds in escrow until specific milestones or tasks are completed. Once the client approves the work, the funds are released to the freelancer.
1.2. Why Leverage This Payment System?
Security: Clients are billed automatically based on tracked time for hourly contracts, or milestones for fixed-price contracts. Freelancers receive payments as soon as the work is approved.
Transparency: Both parties can see the status of payments, invoices, and funds in real-time.
Peace of Mind: Both clients and freelancers are protected from payment issues, such as non-payment or discrepancies in hours worked.
Step 2: Setting Up Payment Methods for Hourly and Fixed-Price Contracts
2.1. Setting Up Payment for Hourly Contracts
Before starting an hourly contract, both the freelancer and the client need to ensure that their payment details are set up and verified on Upwork.
Client's Setup: Clients must have a verified payment method (credit card, debit card, or PayPal) linked to their Upwork account. This ensures that funds are available to pay for the freelancer’s work.
Freelancer's Setup: As a freelancer, you must have a verified payment method (like PayPal, direct bank transfer, or Upwork’s Payoneer) to receive payments. You will also need to use Upwork’s time-tracking tool, the Work Diary, to log your hours, which will then be billed to the client automatically.
Example: "As a freelance real estate consultant, I’ve set up my PayPal account on Upwork to receive payments for hourly work. When I’m tracking time on my client’s property listing project, I ensure I use Upwork’s Work Diary to log each hour worked, ensuring I’m paid for every minute of my work."
2.2. Setting Up Payment for Fixed-Price Contracts
For fixed-price contracts, the client must first fund the agreed amount for each milestone in an escrow account. Freelancers are then paid once the client approves the work.
Client's Setup: The client agrees on an amount for each milestone and funds this amount into escrow.
Freelancer's Setup: After agreeing to the contract, the freelancer starts working on the deliverables for each milestone. Once the milestone is completed, the freelancer submits the work for review.
Example: "For a real estate website design project, I agreed with the client on three milestones:
Initial design concept (funded in escrow: $500)
Full website build (funded in escrow: $1,000)
Final revisions and delivery (funded in escrow: $500) After I complete each milestone, I submit the work and wait for approval to release the payment from escrow."
Step 3: Tracking Hours and Submitting Work for Hourly and Fixed-Price Contracts
3.1. Hourly Contracts: Using Upwork’s Work Diary
For hourly contracts, Upwork’s Work Diary is the primary tool for tracking work. Here’s how to use it efficiently:
Log Hours Regularly: Use the Work Diary to log time worked on the project. The tool automatically captures time, captures screenshots, and records activity levels to ensure transparency.
Example: "For my hourly contract managing real estate listings, I use the Work Diary to track time spent researching properties, drafting content, and creating property pages. Every time I switch tasks, I make sure to mark it in the Work Diary so the client knows exactly what I’m working on."
Time Tracked is Billed: The client will be automatically billed for the hours worked, and freelancers will be paid every week according to the time recorded.
Example: "Every Monday, I review the Work Diary to ensure that all my tracked hours from the previous week are accurate. My client is billed automatically for the time, and I receive payment for the hours worked once the client’s payment is processed."
3.2. Fixed-Price Contracts: Submitting Milestones and Receiving Payments
For fixed-price contracts, you should submit your deliverables when a milestone is complete.
Submit Work: Once you’ve completed a task or milestone, submit it via Upwork’s submit work feature. The client will then review it, and if everything is satisfactory, they will approve it, and the payment will be released from escrow.
Example: "For the final milestone of a real estate website design project, I completed the responsive design and submitted it via Upwork for approval. Once the client reviewed the work and confirmed everything was to their satisfaction, the payment was released from the escrow account."
Approve and Release: Once the client approves the work, the funds in escrow are released to you. If there are revisions required, the client will request changes, and once completed, the payment will be released.
Example: "After completing the client’s requested revisions for the property listing page, I resubmitted the work. The client approved the changes, and I received the final payment from the escrow account."
Step 4: Managing Payment Disputes and Issues
4.1. Resolving Payment Disputes
Occasionally, issues may arise around payments. This can happen for both hourly and fixed-price contracts. Here’s how to handle such situations:
For Hourly Contracts: If a client disputes hours worked, Upwork will review the Work Diary to ensure that time is accurately tracked. If discrepancies exist, they may mediate between you and the client.
Example: "I received a notification that my client disputed some hours I logged for a research task. Upwork reviewed the screenshots from my Work Diary and confirmed that the hours I logged were accurate, so the payment was successfully processed."
For Fixed-Price Contracts: If a client disputes a milestone payment, you can either negotiate a resolution directly with the client or, if necessary, request Upwork’s mediation service to help resolve the issue.
Example: "I submitted my work for the second milestone, but the client claimed the design didn’t meet the original scope. We couldn’t reach a resolution, so I opened a mediation case with Upwork, and they helped us find a fair solution."
4.2. Avoiding Payment Issues
To prevent disputes, ensure that you have clear communication with the client about deadlines, expectations, and scope. Regularly check in and ask for client feedback during the course of the project.
Example: "Before submitting any deliverables, I always confirm with my clients that we are on the same page regarding the project scope and milestones. This ensures that there are no surprises when it comes to payment."
Step 5: Withdrawing Your Earnings
Once you’ve been paid, Upwork allows you to withdraw your earnings using various payment methods.
Choose Your Preferred Payment Method: Choose a payment method that suits your needs, such as PayPal, direct deposit, or Upwork’s Payoneer card.
Withdraw Funds: Once you’ve received payment, you can withdraw funds to your bank account or use the Upwork Payoneer card for purchases or ATM withdrawals.
Example: "I set up my Payoneer account on Upwork, and every week, I transfer my earnings to my Payoneer card. This allows me to access funds quickly and use them for business expenses."
Conclusion
Leveraging Upwork’s verified payment system for both hourly and fixed-price contracts ensures a smooth, secure, and efficient financial process for freelancers and clients. By setting up the right payment methods, tracking hours accurately, submitting milestones, and managing disputes, you can maintain transparency and professionalism, build trust, and ensure timely payments.
Key Takeaways:
Hourly Contracts: Use Upwork’s Work Diary to track time and ensure payments are processed automatically.
Fixed-Price Contracts: Fund milestones in escrow and release payments once the work is approved.
Manage Disputes: Use Upwork’s support and mediation tools to resolve any payment issues that may arise.
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